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Wednesday, May 22, 2024

Petroleum. The strongest price increase in a year

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Oil prices on the fuel exchange in New York record the strongest increase in a year after an unexpected and significant reduction in oil supplies from OPEC+ countries.

A barrel of West Texas Intermediate crude for shipments on V traded at $80.69 at NYMEX in New York, up 0.34% after rising more than 6% on Monday.

Brent crude on ICE for V deliveries is priced at USD 85.21 per barrel, up 0.33 percent.

Mining reduction

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Saudi Arabia and other OPEC+ oil producers announced a voluntary reduction in oil production from May to the end of 2023. In parallel, Russia declared extending similar restrictions until the end of the year.

The unexpected announcement by OPEC+ of reducing oil supply was a strong surprise for the global oil market and has already prompted many analysts to raise their oil price forecasts, although there are also bearish experts.

“OPEC now has a very significant ‘price power’ compared to the past,” Goldman Sachs analysts write in a market note.

“Saudi Arabia is expected to United Arab Emirates and Kuwait will fully and +almost immediately+ comply with the agreed rules, while compliance by, for example, Iraq will be more gradual and rather imperfect,” they add.

Concerns are growing in the markets that OPEC+ actions and reduction of oil supply will add new strength to inflationary pressure.

US Treasury Secretary Janet Yellen described the OPEC+ decision as “unconstructive”. President of the USA Joe Biden for the time being, he underestimates the problem of the drop in oil supply.

“The impact of the decision to cut supplies from OPEC+ will not be as bad as we think,” he assessed on Monday the president of the United States of America.

Main photo source: Shutterstock

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